Trump Agencies Bicker Over Ethanol as Higher Fuel Use Looms

(Bloomberg) -- President Donald Trump's pledge to his rural agricultural base to allow year-round sales of higher blends of ethanol spurred differing opinions between two key federal agencies Wednesday.

U.S. Agriculture Secretary Sonny Perdue told lawmakers in a House hearing on Wednesday that a final rule to allow widespread sales of those higher blends “won't happen” by the summer-driving season following delays from the 35-day partial government shutdown.

That sparked a swift response from the Environmental Protection Agency, which is writing the regulation and insists the measure is on track.

“EPA is planning on releasing its RVP/RIN market reform proposal in March, and working expeditiously to propose and finalize the rule consistent with the president's direction before the start of the summer driving season,” agency spokesman Michael Abboud said in a statement.

Rural Midwest voters want the Trump administration to move quickly on year-round sales of so-called E15, a blend of gasoline comprised of 15 percent ethanol. That ratio currently is restricted on fuel in some areas during the summer months. Trump told Iowa voters in the autumn that he had signed a memo telling EPA to lift summertime restrictions on the fuel.

Shutdown Delay

The government shutdown halted work at the EPA, stoking skepticism in the Midwest Corn Belt that the administration will have the measure in place this summer to meet peak fuel demand. The slumping farm economy has struggled during the U.S. trade war with China that has damped exports of ethanol, soybeans and other agricultural goods.

Perdue's comments came just before the Senate held a procedural vote to advance acting EPA chief Andrew Wheeler's nomination to be the agency's administrator, setting up a full confirmation vote Thursday. Wheeler has tried to assuage lawmaker concerns on biofuel policy.

Within hours, Perdue had backtracked and was taking pains to assure the public that the E15 rulemaking was happening on schedule. “Great seeing @EPAAWheeler here at @USDA,” Perdue tweeted Wednesday afternoon. “Appreciate him moving expeditiously to finalize E15 rule before the start of summer driving season.”

In his earlier congressional testimony, Perdue said he's pushing EPA to make an announcement “soon” on “discretionary enforcement” for gasoline stations that sell the higher blends, signaling they wouldn't face penalties for offering E15 this summer even if the rule isn't finalized.

Last week, Nebraska Governor Pete Ricketts, a Republican, expressed doubt that EPA would have the measure in place by the start of summer, but was hopeful that it could still be rolled out at some point during the season.

The ethanol debate pits blue collar oil workers against farmers producing the crops used to make biofuel, spurring a ruckus between two of Trump's main constituencies.

Biofuel advocates on Wednesday blasted the possible delay. Renewable Fuels Association President Geoff Cooper called it a “gut punch” if true.

“The year-round E15 provisions are straightforward, and there is no reason they could not be promulgated by this summer,” Cooper said. The group has asked the EPA to separate out more complicated provisions in the plan targeting biofuel compliance credits.

“We appreciate EPA's clarification on the E15 rulemaking timing,” Leigh Claffey, a spokeswoman at the industry trade group Growth Energy, said in an email. “However, it is imperative that EPA follow through on its commitment to allow year-round E15 in time for the summer driving season. American farmers and biofuel producers are counting on it.”

--With assistance from Teaganne Finn and Shruti Date Singh.

To contact the reporters on this story: Mario Parker in Chicago at mparker22@bloomberg.net;Jennifer A. Dlouhy in Washington at jdlouhy1@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi

©2019 Bloomberg L.P.